THURSDAY, March 28, 2024
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NCB expects fewer credit checks on new loan applicants this year

NCB expects fewer credit checks on new loan applicants this year

CREDIT CHECKS of new loan applicants by financial institutions are expected to reach only 12.5 million this year, the lowest in five years, as the economic uncertainty forces financial institutions to tighten criteria for new customers.

 
Surapol Opasatien, chief executive officer of the National Credit Bureau, said its financial-institution members had attempted to screen new customers, as reflected in the dip in loan approvals.
The first six months saw 7.52 million requests for credit records, so for the whole year, the total should be 12.5 million, lower than 13.29 million last year. 
Financial institutions have toned down their campaigns to draw new customers because now that they have raised the conditions on new loans, the campaigns may not be useful, he said.
New accounts from the consumer system database of the bureau in the first quarter of this year showed a decrease from the end of last year. 
The non-performing-loan (NPL) ratio in the first quarter climbed to 6 per cent and special mention loans (SM) to 4 per cent.
New housing loans dropped 19 per cent quarter on quarter but SMs increased 7 per cent and NPLs 8 per cent. 
However, overall inquiries will still increase this year to 46.03 million after requests for credit reviews of existing customers in the first half surged to 22.18 million, compared with 32.74 million for all of last year.
The NCB expects credit reviews will climb to 36 million this whole year, bringing inquiries to 48 million transactions.
Commercial banks are quite proactive in checking the credit of existing customers to reduce the probability of default, while specialised financial institutions (SFIs) have moved more slowly in reviewing borrowers.
This might pose a risk to SFIs in the future, he said.
The state-owned Bank for Agriculture and Agricultural Cooperatives is the latest member of the bureau with 11 million accounts, of which 4.1 million were indebted only to the BAAC and 2.6 million were indebted to the BAAC and other financial institutions.
At the halfway point this year, the NCB had registered 92.09 million accounts from 93 financial institutions, of which 88.36 million accounts were in the consumer system database and 3.73 million in the commercial database.
After the BAAC became a member of the NCB, several agricultural-machinery leasing companies and local motorcycle finance companies have held meetings with the bureau, as they want to offer more lending products to BAAC customers.
The bureau adopted credit scoring in May. This will help the members get accurate scores for loan approval decisions and improve the country’s ranking in next year’s Ease of Doing Business survey by the World Bank.
The credit scoring by the bureau is part of the World Bank’s Doing Business survey. Thailand’s depth of credit information index has been awarded 6 out of 8 points by the World Bank because the bureau or registry credit scores in Thailand did not offer a value-added service to help banks and financial institutions assess the creditworthiness of borrowers.
Thailand is expected to be given 7 out of 8 for depth of credit information in the Doing Business 2017 ranking after the NCB added the credit scoring service.
Banks will have actual costs in seeking accurate data on loan applicants and the interest rates should be via risk-based pricing to be fair to all borrowers, Surapol said.
Consumers including small enterprises can check their scores before going to financial institutions. 
This will help them know their chances of accessing lending and the ability to pay debt and this will lead to the improvement of the ease of doing business in Thailand, he added.
 
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